We have known for decades that our East Bay market has a listing strategy and cadence different from just about every other market in the country.
Throughout the East Bay, when a home hits the market the list price is a “teaser” price with a set offer date on which the seller will review offers. As funny as it may sound, the list price is not a valuation tool (in our market) and is more closely tied to marketing and market strategy.
This long-standing listing strategy is intended to attract a wave of attention, multiple offers, and a competitive negotiation – all to drive the highest price the market can bear with the most competitive terms. With blind bidding, buyers are tasked with finding and offering their highest price. And, as competition for a home grows, buyers grow their budget in turn.
It is evident in the market data that a home that goes into contract on or before their offer date procures a higher sales price compared to those that linger past. If we look at the homes that have closed escrow this year, those homes that sold by their offer date sold for 20.8% over their list price, on average. While homes that lingered past their offer date sold for only 2.4% over their list price. Additionally, those homes that sold by their offer date had an average sales price 31% higher, compared to homes during the same time that sold beyond their original offer date. When we are talking about $1m+ sales prices, that difference equals multiple hundreds of thousands of dollars. That is a big difference!
The most successful listing agents understand that one of the most important, strategic decisions for any home sale is the list price. And, as the market shifts and sways, knowing where to list a home is the difference between multiple offers (and negotiating leverage), and no offers.
When the market first starts to get tenuous, the offer date and list price strategy is even more important. This is where we first start to see any cracks in the market. Ask any active and seasoned agent right now how they feel the market is performing and they will say, “it is so uneven. Some homes are going crazy and others aren’t getting any offers”. And, they are right.
The subtle shift that many of us started feeling a few weeks ago is playing out in the data with a growing percentage of homes selling after their offer date, and for lower prices, as the year has progressed - pointing to cooling buyer demand or sellers unwilling to accept what the market can bear.
We did a deep dive into the listing data this past week to get a handle on how to advise several of our seller and buyer clients in the market and here is what is shown for the area encompassing El Cerrito through Oakland.
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During the first 5 months of this year, 1300 homes sold, of which 38% went into contract after their original offer date.
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Over the past 30 days, 319 homes sold, of which 44% went into contract after their original offer date.
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There are currently 268 homes in contract (pending), of which 61% went into contract after the original offer date.
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There are currently 610 homes available for sale (active), of which 75% have already gone past their offer dates.
Just in the first half of this year we have seen a shift from the majority of homes selling by their offer date to the majority not selling by their offer date. And, as we just mentioned, that difference can equate to a considerable price gap for sellers, and buyers, involved.
We have now shifted into a market where sellers need to do more to move their home sale into the category of homes that sell by the offer date with multiple offers. The most successful sellers hire an agent who knows how each factor impacts their outcome and then trust them at every turn. From market prep, to disclosures, to list price strategy, to marketing and negotiating, every step matters and is the difference of several hundred thousand dollars in your sales price. One single misstep is too costly in today’s precarious market. Hire the right agent and then trust their guidance.
Buyers, now is the time to get serious, especially if you can see through the noise. That home that didn’t get offers because their tile choice was questionable? Jump at it! Changing a bad tile choice is easier than you may think. That home that is sitting on the market because they listed too high and cut out the competition? Go for it! There is no better buyer situation than one in which you don’t have competition. Don’t hold out for perfection unless you have an unlimited budget. The perfect homes are the ones that sell for considerably more than the market. Instead, stay steadfast on the things that aren’t easily changed in a home but flexible on anything that can be changed. You will be far happier in the end.
